updated 4/7/2005 4:27:35 PM ET 2005-04-07T20:27:35

Record company Warner Music Group Inc. said Thursday it was served with another subpoena by New York Attorney General Eliot Spitzer in connection with an industrywide investigation of relationships between music companies and radio stations.

Warner, the third largest record company in the country, said it is too soon to predict the outcome of the investigation. But the company said the inquiry has the potential to result in changes to the way the music industry promotes records or face financial penalties, which could hurt Warner’s business and brand value.

According to published reports, Spitzer began requesting documents and information last autumn from Warner and fellow record companies EMI Group PLC, Vivendi Universal SA’s Universal Music Group, and Sony Corp. and Bertelsmann AG’s Sony BMG Music Entertainment.

Spitzer’s investigation centers around independent promoters — middlemen between record companies and radio stations — whom music labels pay to help them secure better airplay.

Broadcasters are prohibited from taking goods or cash for playing songs on their stations. The allegations are that independent promoters have been paying radio stations an annual fee for song placements on future play lists.

Warner’s latest subpoena was received March 31 and the company said in a regulatory filing with the Securities and Exchange Commission that it has been producing documents for Spitzer and expects to complete its production in April.

In an earlier regulatory filing, the New York-based company said Spitzer served it with subpoenas on Sept. 7 and Nov. 22, 2004, in the same matter.

Also in the filing Thursday, the company, which was purchased last year for $2.6 billion from Time Warner Inc. by a group of private investors led by Edgar Bronfman Jr., said it plans to pay a $141.5 million cash dividend to Bronfman and his fellow owners, along with 10 top executives at the company. The dividend, which will be paid ahead of the IPO, won’t be shared with any new investors who purchase the stock when it goes public.

On top of the dividend, the company will pay a $73 million management termination fee to Bronfman’s Music Capital Partners LP and other owners, including private-equity firms Thomas H. Lee Partners LP, Bain Capital LLC and Providence Equity Partners Inc.

Of the net proceeds the company is expected to raise — $581 million — only $7 million will be used for general corporate purposes, according to the filing.

Warner Music’s owners already have been paid back all of the cash they put up for the initial acquisition, through a combination of dividend payments and proceeds from bond issues. Bronfman, in addition to leading the acquisition from Time Warner, is now the company’s chairman and chief executive.

Warner Music, whose labels include Atlantic Records, Elektra Records and London Records, boasts a roster of more than 38,000 artists, with top acts such as Madonna, Linkin Park and Kid Rock.

The company plans to list its common stock on the New York Stock Exchange.

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